IFSCA introduces new unified regulatory framework for listing securities in GIFT City

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The International Financial Services Centre Authority (IFSCA) has issued a new unified regulatory framework for listing securities on stock exchanges in GIFT City, opening significant opportunities for Indian companies, particularly startups, to access large pools of foreign capital. 

This framework, operational from August 30, allows Indian and foreign issuers to tap offshore investors by listing securities on the two stock exchanges in GIFT City, providing a fillip to the primary market in the IFSC.

To be eligible for listing, companies must have recorded an operating revenue of at least $20 million in the previous financial year or averaged that amount over the past three years. Additionally, they must have a pre-tax profit of at least $1 million and a minimum post-issue market capitalization of $25 million, according to the new norms.

The new listing framework was released six months after the Modi-led government allowed Indian startups and unlisted companies to list their shares directly on GIFT City exchanges. Existing listed entities in India can also be listed in GIFT City via Offer for Sale or Qualified Institutional Placement, though SEBI will need to amend local regulations to facilitate this process.

Sunil Gidwani, Partner at Nangia Andersen LLP, noted that the IFSCA’s regulations have unlocked market opportunities within International Financial Services Centres (IFSCs). He highlighted that while the regulations permit listing all types of securities, SEBI must amend its existing rules to allow currently listed companies to list in GIFT City.

The new listing framework simplifies  access to capital markets for Indian and foreign issuers, promoting greater flexibility and efficiency. 

The IFSCA’s regulations are based on recommendations from the T.V. Mohandas Pai-led Standing Committee on Primary Markets (SCOP), established in February 2024, to advise developing a robust primary market in GIFT City. The panel recommended aligning IFSCA’s listing regulations with other international financial centers like Singapore, Hong Kong, the USA, and the UK.

The new rules replace the 2021 norms, enabling companies incorporated in India, IFSCs, and Financial Action Task Force (FATF) compliant foreign jurisdictions to issue and list their foreign-currency denominated securities in GIFT City. The regulations also provide a framework for listing various financial products, including Green bonds, social bonds, and corporate vehicles such as Special Purpose Acquisition Companies (SPACs).

Mohit Chaudhary, Managing Partner, Kings & Alliance LLP, said that the regulations aim to protect investors’ interests by ensuring that they are fully informed about material information required for their decision-making.. 

The proposed regulations are expected to reduce any systemic risk in the primary market activities in the IFSC, he added.